This is how much of your money the government is wasting

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This is how much of your money the government is wasting

Much has been said about the cost to upgrade South African president, Jacob Zuma’s Nkandla residence, with chants of “pay back the money” still echoing down the corridors of Parliament.

And while the likes of The Economic Freedom Fighters and the Democratic Alliance have used Nkandla as a political football to win votes, a relatively innocuous sum of money – when compared to R700 billion lost to corruption over the last 20 years – has incensed the country’s citizens to a point of frenzy.

The South African public has been bombarded with media reports about government projects or branches using up millions, and often billions, of taxpayers’ money.

These range from irregular and wasteful expenditure at provincial and municipal level, to infrastructure projects which often balloon far past their original budgets.

The figures presented are often way beyond the comprehension of the every-man. So when broken down, how much do these billions of rands translate to an individual’s direct exposure to them?

Working with the tax base

While income tax makes up 34% of the fiscus, VAT, company tax and other levies effectively all come out of the pockets of the South African public and business owners.

Determining the exact number of taxpayers is a tricky affair. In May 2015, union Solidarityfound that approximately 3.3 million taxpayers paid 93% of all income tax in the country.

This is the figure used for the calculations below, as it comprises the vast majority of tax-payers in the country.

Breaking the tax groups down further, however, reveals that the tax numbers are even more disproportionate – with 1.1 million taxpayers paying as much as 70% of all income tax, according to Solidarity.

To present the data as accurately as possible, BusinessTech selected three groups – the bulk taxpayers; SARS registered taxpayers; as well as all eligible tax payers in the country.

This translates to:

  • Taxpayers – 3.3 million
  • SARS registered taxpayers – 15.4 million
  • Eligible tax payers – 33 million 

This is how much – in theory – that individuals paid in some of the more high-profile cases of public spending or wasteful expenditure in South Africa.

Nkandla Security Upgrades

Nkandla

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R246 million R75 R16 R7.50

The security upgrades at President Jacob Zuma’s Nkandla homestead have captured the most attention as an example of the improper use of taxpayer’s money in recent times.

The per person tax burden is however, relatively minor, at R75 – or R75 too much.


 

African Union Fees

Africa

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R700 million R212 R45 R21

South Africa pays R700 million a year to be a part of the African Union. In June, the DA challenged the “outrageous” amount, seeking answers as to why the contribution was so high.

Described as a “colossal waste”, the figure splits to around R210 per taxpayer.


 

Prasa Afro 4000 trains

Afro 4000

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R3.5 billion R1 060 R227 R106

The Passenger Rail Agency of South Africa (Prasa) hit the headlines when it was found that the 70 Afro 4000 trains it had purchased from Spain earlier this year, did not meet the specification requirements for South African rails.

The trains were purchased for R3.5 billion, which works out to an average individual tax burden of over R1,000 for equipment which the group has admitted, simply does not work effectively.


 

Gauteng wasteful expenditure (2015)

Gauteng Online

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R5 billion R1 515 R325 R152

It was announced on 1 September that Gauteng incurred over R5.8 billion in irregular expenditure in the 2014/15 financial year – up from R3.8 billion in the previous year.

According to Gauteng premier David Makhura, this was due to a failure to comply with financial management laws in the province.

Translated to individual citizens, this is around an average of over R1,500 per person, that simply cannot be accounted for.


 

Municipalities irregular expenditure (2014)

Municipality

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R11.5 billion R3 484 R747 R348

In June 2015, the auditor general revealed that 264 municipalities across South Africa had been exposed to a combined R11.5 billion in irregular expenditure in the 2014 financial year.

This includes fruitless and wasteful expenditure, and a multitude of non-compliance issues with procurement. Irregular expenditure refers to monies used or diverted to things they were not intended for.

Split among the tax paying population, this means individuals were directly exposed to about R3,400, on average.


 

E-toll guarantees

E-toll e-tag

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R31 billion R9 393 R2 013 R940

The controversial e-tolling system has been met with visceral opposition since the scale and full financial burden on Gauteng road users came to light.

While Sanral and the department of transport struggle to get the user-pays principal to stick with motorists, the government has meanwhile placed a guarantee of R31 billion in payments for the system, which needs to be met whether Gauteng road users pay or not.

Government has already bailed out Sanral with regards the the e-tolling system, using state funds, meaning that South African taxpayers are accountable for just over R9,300 a head for the full amount.


 

Public works wasteful expenditure (2009 – 2014)

Goverment wasting money

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R35 billion R10 606 R2 272 R1 060

In 2014, the public works department reportedly lost just under R35 billion in wrongful and wasted construction or leasing of state buildings over 5 years.

If you were paying taxes over that time, this would have come at an average R10,600 individual cost to you.


 

SA nuclear plans

Nuclear 2

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R500 billion R151 515 R32 467 R15 151

South Africa has entered into agreements with Russian firms to construct several nuclear power plants in the country.

While details surrounding how these projects will be funded are sketchy and obscure, taxpayers will undoubtedly enter into the equation in paying the estimated optimistic R500 billion price tag.

If the entire project comes from public funds, it will be at an average cost of R150,000 per tax payer. If the DA’s estimates of the costs ballooning to R1 trillion become a reality, the burden would double to R300,000.

According to the DA, even if the initial estimate of R500 billion are accurate, the project is not affordable.


 

Corruption (1995 – 2015)

Corruption

Reported cost Cost per taxpayer Cost per SARS registered taxpayer Cost per citizen
R700 billion R212 000 R45 000 R21 000

In January, the Institute of Internal Auditors reported that South Africa has lost R700 billion to corruption over the last 20 years.

Breaking it down across the selected demographics, every citizen in the country has, on average, thus spent R21,000 in that time – or just over R1,050 a year.

Spread across bulk tax payers, the figure climbs massively to R212,000.

This is how much of your money the government is wasting

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